2006 (10) TMI 8 - AAR - Central Excise

Central Excise Plastic packaging of retail product Benefit of Notification No.8/2003-CE dt. 1.3.2003 as amended by Notification No.8/2006-CE dt. 1.3.2006 is admissible though joint venture unit is not a SSI unit Assessee can accumulate credit of CVD & SAD till complete clearance of Rs.100 lakhs

Summary

Issues:
1. Entitlement for concession under C.E. Notification No. 8/2003 despite proposed foreign equity exceeding 25%.
2. Claiming Credit of Counter Vailing Duty (CVD) and Special Additional Duty (SAD) on imported machinery.

Analysis:

Issue 1:
The applicant, a private limited company engaged in designing and manufacturing plastic packaging, sought an advance ruling under Section 23C of the Central Excise Act, 1944, regarding the entitlement for concession under C.E. Notification No. 8/2003. The company intended to establish a joint venture with a foreign company, where the foreign equity would be 97%. The Commissioner confirmed that the applicant could avail of the exemption under the notification, even if it ceased to be a Small Scale Industrial Unit, subject to fulfilling the conditions therein. The Authority concurred with the Commissioner's view and ruled that the applicant was entitled to the concession under the said notification, despite the proposed foreign equity exceeding 25%.

Issue 2:
Regarding the second question raised by the applicant concerning the claiming of Credit of CVD and SAD on imported machinery, the Commissioner clarified that the exemption would apply provided the manufacturer did not utilize the credit of duty on capital goods under Rule 3 of the CENVAT Credit Rules, 2004. The applicant was informed that they could start claiming the credit of CVD and SAD once they exhausted the exemption limit and paid excise duty at the factory gate on production. The Authority emphasized that the applicant could accumulate credit of CVD and SAD paid on the machinery until they completed clearances of Rs. 100 lakhs. Therefore, the ruling allowed the applicant to claim the credit of CVD and SAD on imported machinery under the specified conditions.

In conclusion, the Authority for Advance Rulings, New Delhi, pronounced its ruling on both issues on October 17, 2006, affirming the applicant's entitlement to concession under C.E. Notification No. 8/2003 despite the proposed foreign equity exceeding 25% and permitting the applicant to claim the Credit of CVD and SAD on imported machinery subject to compliance with the specified conditions.